More cuts to R&D tax credits.

More cuts to R&D tax credits in the February 2016 Ontario budget.

It should come as no surprise that in the provincial budget (Jobs For Today and Tomorrow) announced on February 25, 2016, the Ontario government has proposed a reduction to the level of support provided via Research and Development Tax Credits. These changes are effective for eligible R&D expenditures incurred in taxation years that end on or after June 1, 2016.

Specifically, this includes a reduction to “top up” programs that are combined with the Scientific Research and Experimental Development (SR&ED) program:

While this may seem insignificant to organizations with smaller R&D budgets, organizations who are currently investing heavily in R&D may feel the pinch.

Explanation of Changes to R&D Funding in Ontario

The text below (taken directly from the 2016 Ontario budget) summarizes the changes made to provincial R&D tax credits, including the ORDTC, the OITC, and the Ontario Business Research Institute Tax Credit (OBRITC). The text also explains that the Ontario government is redistributing the funds diverted from the indirect funding approach (i.e. tax credits) via direct funding programs (i.e. so-called “targeted investments”).

Ontario 2016 Budget R&D tax credits

Provincial R&D funding the 2016 Ontario budget – “Jobs For Today and Tomorrow

Comparison With Previous Ontario R&D Funding

It is helpful to see how R&D tax credit rates have changed over the years in Ontario. The table below offers a side-by-side comparison of these changes.

Budget YearOntario Innovation Tax Credit (OITC)Ontario Business-Research Institute Tax Credit (OBRITC)Ontario Research and Development Tax Credit (ORDTC)
201110%20%4.5%
201310%20%4.5%
201510%20%4.5%
20168%20%3.5%

The sources for these tax credit rates can be found in the following SREDucation articles: Roundup: Provincial R&D Credits, 2013 Ontario Budget: Rumblings Over Tax Credits, and Provincial Tax Credits: Making the Most of SR&ED.

Want to voice your thoughts about R&D funding in the 2016 Ontario budget? Join the conversation on our LinkedIn group.

Looking for more information about innovation and R&D funding over the years? Sign up for The Comprehensive Guide to SR&ED today!

 


Elizabeth Lance

Elizabeth is known as the "SR&ED Maven" in the industry. With a love of documentation and the nuances of language, she is often engaged by multi-million dollar companies to help improve documentation and workflow processes. Her favourite sentence (which she hears regularly) is "Accepted as Filed". Find out more about her on LinkedIn.

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